How to raise prices without losing customersPosted On 25/9/2023
Raising prices is never an easy thing to do. Despite most people understanding that prices have to be increased on a lot of items, from fuel and food to insurance and utilities, it remains a delicate task.
Here are a few tips on how to do it in a way that puts your company in a better financial position and not a worse one caused by an exodus of irritated customers.
Identify where your prices need to go
Once you’ve established the exact percentage of your price rises, there are two trains of thought: phase them in with smaller increments over a period of time or institute one larger price increase in one fell swoop. There are pros and cons to both methods.
A recent study conducted with a panel of 1200 respondents about the prospect of paying more for their favourite products, shows that 67% of buyers prefer the 2nd option saying that numerous smaller increases are more likely to aggravate them. This method creates more uncertainty and continually reminds them that they are paying more than they did before.
Regardless of which method you choose, it’s important to communicate with your customers. Despite most consumers agreeing that prices cannot stay at the same level forever and therefore an increase is inevitable, 65% say that they will stop buying if they have the feeling that the main reason behind the increase is the company’s concern about their profit margin.
Don’t wait for a customer to say, “Hey, you’re charging me more than you did last year!” before you spring into action with your explanation. Give customers plenty of notice. Send them a nice letter signed by you, the owner.
78% of respondents want to be informed in advance so that it doesn’t feel as if the new prices are forced on them and 62% are in favour of the personal letter saying that it gives the impression that the company cares about their customers.
Come up with options
When talking to customers about your looming price increase, you’ll be able to answer their questions. You’ll also be able to come up with options, if necessary. Let’s face it: It’s still very competitive out there, and some customers will not be OK with paying more for your services, especially if other companies remain willing to work for a lower price.
One thing you can do is cross-sell other services to come up with packages, from which a customer can earn a certain discount.
Get staff on the same page
Finally, make sure your staffs are all on the same page. Nothing is worse than having different members of your team giving customers different stories.
56% of consumers lose trust in a company if they receive contrary answers to their questions and as a result stop buying from them.